Organizational Structure for Financial Statement in SAP 720

SAP SYSTEM also provide menu of Financial Accounting to manage all the transactions that impact or influent the financial statement. In SAP, the important organizational for Financial Accounting are company code and business area. 

• Company Code is independent accounting unit that should unique, has four character key which is can be alphanumeric. To create balance sheets and profit loss statements, the general  ledger will kept at the company code level. Remember that on every financially has specific company code based on transaction and each company code has a local currency.

• Business Area is fields of activity that should include profit area. Ins SAP system you can set up this business area. Remember that use of business area is optional. Whereas for Controlling Application, the important organizational is Controlling Area. It will indentify a organizational structure for which costs and revenues can be managed and allocated. More than one company code can be assigned with one or more controlling areas.

Controlling Area (taken from help.sap.com)

In general ledger should be set up based on a Chart of Accounts (COA). A chart of account contain with the definitions of all general ledger accounts. It should be consist of the account number, account name, and type of general ledger account. Each company code must has specify one chart of accounts for the general ledger. A chart of accounts can be used by multiple company codes. You can also used account groups to organized and manage a large number of general ledger accounts.